Milestone Pharmaceuticals Inc. Leases Disclosure
6. Leases
On May 20, 2022, the Company entered into a lease arrangement for a term for new office space located in Charlotte, NC. The Company recognized the operating lease right-of-use asset and operating lease liabilities at the lease commencement date on August 1, 2022. The interest rate implicit in lease contracts is not readily determinable and the Company does not have a public credit rating and carries no debt. As such, several factors were considered in the determination of the Company’s incremental borrowing rate used in determining the present value of lease payments. The Company’s examined credit ratings for similar companies, assumed equivalency between the Canadian and U.S. markets for collateralized debt and used rates near the period. This resulted in an incremental borrowing rate of 7.55%. Lease expenses are recognized on a straight-line basis over the lease term, which is accomplished by increasing the amortization of the right-of-use asset as interest expense on the lease liability declines over the lease term.
On August 12, 2025, the Company entered into an arrangement for the lease renewal for its headquarters located in Ville Saint-Laurent, Quebec. The lease term is from December 1, 2025, expiring on November 30, 2027. The Company recorded the operating lease right-of-use asset and operating lease liabilities at the effective lease arrangement date of August 12, 2025. The Company’s examined credit ratings for similar companies, assumed equivalency between the Canadian and U.S. markets for collateralized debt and used rates for the remaining lease term of 28 months. This resulted
in an incremental borrowing rate of 5.2%. Lease expenses are recognized on a straight-line basis over the lease term, which is accomplished by increasing the amortization of the right-of-use asset as interest expense on the lease liability declines over the lease term. The Company is not reasonably certain of renewing the lease following the current renewal option and recognized the right-of-use asset and operating lease liabilities to November 30, 2027.
The Company's operating office leases right-of-use assets as at December 31 were as follows:
2025 | | 2024 | ||||
Opening balance | | $ | 1,376 | $ | 1,917 | |
Right-of-use adjustment, renewal August 2025 | 334 | — | ||||
Amortization of right-of-use asset | (581) | (541) | ||||
Closing balance | $ | 1,129 | $ | 1,376 | ||
Operating lease expenses of $668 and $697 are included in general and administrative operating expenses in the consolidated statement of loss, and within operating activities in the statement of cash flows for the years ended December 31, 2025 and 2024, respectively and are comprised of two operating lease right-of-use assets and one operating lease of less than 12 months.
The following table summarizes the future minimum lease payments of right-of-use assets operating leases as of December 31, 2025:
January 1, 2026 to December 31, 2026 | $ | 709 | |
January 1, 2027 to November 30, 2027 | 555 | ||
Total | 1,264 | ||
Less interest | (78) | ||
Total net of interest | $ | 1,186 |
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 20, 2026 | Showing above |
| 2024 | Mar 13, 2025 | |
| 2023 | Mar 21, 2024 | |
| 2022 | Mar 29, 2023 | |
| 2021 | Mar 24, 2022 | |
| 2020 | Mar 29, 2021 | |
| 2019 | Mar 6, 2020 | |
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.